Founder of China’s Evergrande Group Hui Ka-yan pleads guilty in fraud trial

China Evergrande Group’s founder and former chairman Hui Ka-yan pleaded guilty to charges including embezzlement of corporate assets and corporate bribery, according to a statement issued by the Shenzhen Intermediate People’s Court. The trial was held on Monday and Tuesday, and the court said it would issue its judgment at a later date. The charges against Hui and Evergrande also included illegally absorbing public deposits, fundraising fraud, illegal loan issuance, fraudulent issuance of securities and unlawful disclosure of material information. The trial marks a milestone in the saga of Evergrande’s downfall – from the apex of China’s property market to the world’s most indebted property developer. The company’s struggles made it a poster child for the sector, which once accounted for roughly a quarter of the economy but has been in a prolonged downturn since late 2020, with falling home prices weighing on household wealth. Analysts said a great deal of additional information was expected to emerge in subsequent proceedings. The trial was not expected to make a difference to the market’s recovery, however. “In our view, stabilisation of home prices will be a key factor in restoring homebuyers’ confidence, and prices are fundamentally driven by supply and demand, rather than by incidents such as Hui’s guilty plea,” said Edward Chan, a Greater China property analyst at S&P Global Ratings. Another analyst, who requested anonymity, said the broader market had already undergone a significant correction, and Evergrande’s influence on the sector had largely diminished in recent years. As such, this development was unlikely to materially alter market fundamentals or sentiment, the analyst said. Much of the uncertainty and loss of confidence associated with the sector had already been priced in, and market participants now had a more realistic understanding of underlying risks and operating conditions. Local governments have recently introduced various supportive policies for the property sector, with the second-hand housing market showing some uplift this year, but analysts remain split on the sector’s outlook given ongoing structural pressures. Some deputies to the National People’s Congress, members of the Chinese People’s Political Consultative Conference, relatives of the defendants and representatives of fundraising participants attended the trial as observers. Chinese authorities detained Hui in September 2023 for unspecified crimes. In March 2024, the China Securities Regulatory Commission penalised the insolvent developer 4.2 billion yuan (US$616 million), saying Evergrande inflated its sales by 564 billion yuan in the years preceding its eventual collapse. It also fined Hui 47 million yuan and barred him for life from accessing the capital markets. Evergrande holds the dubious honour of being the world’s most indebted developer, based on its total liabilities of US$332 billion on June 30, 2023. The High Court in Hong Kong in January 2024 ordered the company to be liquidated, leaving creditors with pennies on US$20 billion of defaulted offshore bonds. The company was delisted from the Hong Kong stock exchange in August. Hengda Real Estate, Evergrande’s key onshore operating unit, raised funds from outside investors based on forged financial data, according to a stock exchange filing in Shanghai in 2024. It inflated sales in 2019 by about 214 billion yuan, and 350 billion yuan in 2020, it added. Hui, also known as Xu Jiayin on the mainland, was born in a village in Gaoxian, a town of fewer than 50,000 residents in central China’s Henan province. Raised by his paternal grandmother, he studied metallurgy at what was then the Wuhan Institute of Iron and Steel, before finding work in a local steel mill. Hui quit the job in 1992 and headed for southern China. He first landed a job in trading, where he rode the wave of China’s growing commerce with the world and the rising tide of entrepreneurship that was replacing almost every aspect of communal ownership with private holdings. Four years later, Hui founded Evergrande in Guangzhou, and focused on building affordable homes. He borrowed to build at low cost, selling his flats off-plan and using the high turnover to generate cash flow to fund growth. By the time Evergrande turned 21 in 2017, it was the world’s biggest property developer by sales, surpassing its long-time, crosstown rival China Vanke. In the third quarter of 2020, in an attempt to deleverage and improve the financial health of the property sector, Beijing introduced the so-called three red lines policy, which forced developers to reduce their outstanding debt, among other requirements. Cut off from fresh funding, Evergrande and some peers soon faced a liquidity crisis. This led to a raft of unfinished projects, damaging consumer confidence and buying sentiment. Vanke posted a record 88.56 billion yuan loss last year. It continues to struggle under debt pressure and faces 14.68 billion yuan in maturing debts in 2026, despite having repaid 33.2 billion yuan in bonds since 2025. The developer is offering to repay 40 per cent of the principal upfront on a yuan bond maturing this month, in exchange for a one-year extension, Reuters reported. The developer secured investor approval in January to extend three other yuan bonds under similar terms. China has set an economic growth target of 4.5 to 5 per cent for 2026, after the economy expanded at 5 per cent last year, with measures to stimulate consumption cushioning the economy amid the property downturn and trade headwinds.

Founder of China’s Evergrande Group Hui Ka-yan pleads guilty in fraud trial

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Milestone in downfall of company that was once the world’s largest developer is unlikely to move the market, analysts say

Milestone in downfall of company that was once the world’s largest developer is unlikely to move the market, analysts say